Correct Answer: Foreign direct investment (FDI)

Solution : The correct answer is c) Foreign direct investment (FDI)

Foreign direct investment (FDI) is an example of a capital account transaction. The capital account records the flows of financial assets, such as investments, between a country and the rest of the world. FDI involves a long-term investment by a company or individual from one country into another country, with the objective of establishing a lasting interest in the foreign economy.

FDI typically involves the acquisition of physical assets, such as factories or infrastructure, or the establishment of subsidiaries or joint ventures in a foreign country. It represents a capital outflow from the investing country and a capital inflow for the recipient country. FDI can contribute to economic growth, job creation, technology transfer, and increased productivity in the recipient country.

Importing goods from another country (a) and exporting goods to another country (b) are examples of current account transactions. The current account records the flows of goods, services, income, and current transfers between a country and the rest of the world.

Receiving a foreign aid grant (d) is also an example of a current account transaction. Foreign aid is typically classified as a transfer payment and represents a transfer of resources from one country to another, usually to support development, provide humanitarian assistance, or promote certain policy objectives.